./9 3r 



/ 



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15 
,y 1 



REPORT 



OF 



UNIVERSITY GOHHISSIONERS. 



LIBRARY OF CONGRESS, 

RECEIVED 

AUG 12 1901 

DIVISION OF DOCUMEKTS. 



To the General Assembly of Alabama: — 

The undersigned commissioners, appointed in pursu- 
ance of the joint resolution of the two Houses of the 
General Assembly, approved February 18th, 1897, to 
investigate and report whether the State of Alabama i& 
justly and equitably indebted tc ^^-^ a^-ofo TTr>iT-o^.pity ^r^ 
an amount exceeding that now recognized by the State 
as an endoTvment fund, make the following report : 

In accordance with said joint resolution, Eugene A.. 
Smith was appointed by the Alumni Association in 
June, 1897, Jno J. Mitchell was appointed by the Gov- 
ernor in August, 1897 ; and the time within which these 
two could appoint a third commissioner having expired' 
July 1st, 1897, James W.Lapsley was selected in^March, 
1898, by the board of trustees of the University, as pro- 
vided by law, a third commissioner. 

MEETINGS OF THE COMMISSION, 

The commissioners met at the call of the c^i airman 

UjJ- iiii.c' tyiU. Oi J-li-cii-Cilj aLtCl Oil vLxij j^^ vj. ^ 

30th of June, 1898, at the University; and were given 
access to the accounts, books and records kept there; 
and were also giveu such assistance a-iLcl infcni^^tic'^ j.s 
could be afforded by the President, and others connected 
with the University. At our meeting June 30th, we 
addressed communications to the Governor, Trustees 
and Alumni, a copy of which is hereto annexed and 
marked "A." On the 30th of August we met at the 
Capitol, and examined the old account books in the 
Bt?,te Treasurv and son^c ofth? T^-.^-».-~r,i- r/""' /^.""^t *:r. "th- 
Library, bearing on the transactions submitted to us, 
that we had not found 'elsewhere . We met in Birming- 
ham on the 8th of November, and had before us in an- 



swer to our invitation, Messrs. S. W. John and James 
E. Webb, and President James K. Powers, who forcibly 
presented to us the claims of the University; and we 
met at the Capitol November 22d, to make and submit 
our report ; but being unabho to agree upon a report we 
adjourned again until Dec. 5, since which time we have 
been engaged upon this work. 

It may be added also that individual ini'mbcrs of the 
commission have sp)ent much time and labor at the Uni- 
versity, and at the Capitol, and at their homes, in inves- 
tigating and considering the difficult and important mat- 
ters submitted to them at times when it was not practi- 
cable for the commission to hold formal sessions. 

SCOPE OP INVESTIGATION. 

Our examination began with the Acts of pongress in 
1818 and 1819, granting to the State two Towmships of 
public land, amounting to 45,867 32-100 acres, for the 
use of a ''Seminary of Learning." We examined all 
the Acts and Journals of the Legislature that we could 
find relating to the University, from 1817, down to the 
present time ; and also as far as we could, we exam- 
ined the Minutes and Ordinances of the Board of Trus- 
tees, from its organization up to about 1860, and also 
their reports to the Legislature. We made critical ex- 
amination of all the old land sale books, especially 
those made out b}^ Benjamin F. Porter and constituting 
the basis of his : 

"Statement of the condition of the monied concerns of 
the University of Alabama, from their Commencement 
to the 1st of November, 1836," a copy of which state- 
^nerd. Is Lf-i u^o attached and iii.irkcd '*13/' Tli«.^ couciu- 
sions of Judge Porter in this ''Statement" seeming to be 
erroneous, we examined the accounts of the sales of said 



lands, showiQg what each tract sold for originally, and 
what was stated to be the amount received thereon, and 
made laborious investigation as to what said land books 
show, as to the actual proceeds of said sales. And we 
found what appeared to be a correct accounting for the 
sale and proceeds of substantially all of the lands do- 
nated for the University. 

CLAIMS OF THE UNIVERSITY. 

Preliminary to these investigations we examined the 
^^appeal" of the ''Society of the Alumni," mentioned in 
the preamble to the joint resolution for the appointment 
of this commission, and entitled, "An appeal to the Leg- 
islature of Alabama, by the Alumni of the University, 
October 12, 18i^6," and we observed that the statement 
of indebtedness due the University, amounting to $2,292,- 
305,80, mentiOnied on page 44 of said "Appeal'' is based 
on the following items : 

1. Amount proceeds of land sales lost 
to the University by relief laws passed by 
th^ Legislature, forfeitures, resales leases, 

etc $144/239.18. 

2. Half of amount of $20,000 fee paid 
Judge Porter for acting as agent and attor- 
ney for the University $ 10,000,00. 

3. Amount ofjprofit made by State Bank 

prior to 1837, over and above 6 per cent.. . $108,9^2. 00. 
These with interest make up the $2,292,805.30, on 
page 44 of the "Appeal." On pages 45, 46 and 54, a 
further claim of $300,000 is made against the State, for 
the value of the Rotunda, and Library of 25,000 volumes 
and the dormitories and other property, which the Fed- 
eral army on the 18th of April, 1865, destroyed, as it is 
claimed, on account of the Legislature of the State hav- 



ing engrafted the military feature on the University in: 
1859-60 We have carefully examined and studied, as 
faithfully as we could, all that we could find printed on 
the subject, including the adjustment- made in 1848 and 
1860 and the appeals and reports that led up to those 
adjustments ; and we have considered the relations of 
the University fund to the State LauK, and i lit; iesulu oi 
the State banking, the borrowing of $64,500 from the 
bank and the appropriation of $30,000 in 1H>^6 and $60,- 
000 in 1884 ; and while at this late day with the limited 
p.nrl «nmotiraes Uncertain and inexnr.t rpoorrls available, 
we can none of us be confidently exact as to the calcula- 
tions of amounts involved; yet we find enough to make 
us fairly satisfied as to the conclusions arrived at. 

ITEMS 1 AND 2 $144,239.18 AND $10,000. 

The first item, $144,239.18, comes from and is based 
on Judge Porter's statement of Xov. 1, 1836, hereto an- 



of lo.-'S from forfeitures, relief laws, etr^,.-' and the ac- 
count on which this probable loss is ioundfd couta,ii=x5, as 
shown in said statement, two estimates of interest, $55, 
700. and $4,676, which he says "should have accrued 
thereon on account of. deferred payment of the last half 
of the purchase money." We observe from Porter's 
report that $382,715.57 was the total purchase 
money agreed to be paid by all purchasers for the whole 
45,305 acres, reported by Judge Porter as sold. One 
half was due in eight years from date of purchase, which 
was about 1824. He:Seems;to have meant that $55,700 
was the interest that "should have accrued'' after ma- 
turity of this last half and up to the date of his report 
which ends with the words, ''Calculated to the 1st of 
November, 1836.'* And in arriving at this balance of 



^144,239.18 now charged against the State, he not only 
includes these two items of estimated interest (not col- 
lected, but which he says should have accrued) but he 
-also includes $5 1,959.01 and interest ''proceeds of the 
sales of land repurchased under various rel ief laws . ' ' Now 
it clearly appears to us that this had already been in- 
cluded in the $382,715.57, the total purchase money. 
Hence there seems to be a double charge against the 
State of $51,959.01, and of the estimated interest there- 
on, $4,676.04. The $144,239.18, also includes $55,700 
of estimated interest, as above stated, and if we deduct 
the double charge and the estimated interest, tlie claim 
on its face would be only some $32,000. 

Yet when in 1847 this matter was presented by the 
trustees in their report to the Legislature, these words 
are used. ' 'It is a matter of record that under a law of 
the Legislature of Jan. 7, 1834, the University Fund 
sustsimed a, loss in principal, (their italics), from vari- 
ous sources of $144,239.18." The only "record" on the 
subject is Judge Porter's report, which, to prevent a 
continued misunderstanding about it, we make an ex- 
hibit hereto. 

The act of Jan. 7, 1834, just referred to and com- 
plained of, provides for a revolution of the "lands which 
had been sold at $J7 and upward, and had been declared 
ferfeited under the decision of the Supreme Court. '* 
Looking at the decision referred to, viz. : ''Trustees of 
the University vs. Winston." 5 Stewart & Porter, p. 17, 
we find that the Trustees sued Winston for unpaid pur- 
chase money, claimed to be due for University land 
bought) by him. He defended on the ground, that hav- 
ing made but partial payment, the land was forfeited 
absolutely to the trustees, and the trustees should be 
satisfied with the land, and hence could not recover for 
the deferred payments. The Circuit Court sustained 



this contention of the defendant, and the trustees ap- 
pealed to the Supreme Court. That court affirmed the 
judgment of the Circuit Court, saying among other 
things. 

**The act incorporating tlie University, so far as re- 
spects the provision for the sale of lands corresponds to 
the laws of Congress for the sale of public domain. It 
was never doubted that after holding the land for five 
years, he might either pay for It or forfeit it as he ch>se 
(p. 32). The whole act provides that it was intended 
to give mutual privileges to tht^ purchaser, that of for- 
feiting the land if he found himself unable to pay x^or it, 
and thus be released from the debt he had contracted ; 
to the vendors, that of relying upon the fonViture, or 
resorting to a suit upon the bonds (p. 88). Th<^ plain- 
tiffs must be content to receive the land in satisfaction 
of their demand against th^ defendant, whether it be 
more or less valuable (p. 27) .*' 

Reading the act of January 7, 1834, in the light of 
this decision, rendered the year before, and of similar 
action of the Unitpd States Government in relation to 
its own forfeited lands, we think that the action of the 
Legislature, now complained of, was designed and cal- 
culated to give inducement to purchasers in possession 
of forfeited lands, to remain on them and pay for them 
at an equitable valuation ; and was wise and proper Leg- 
islation. 

This claim for loss by the act of January 17, 1834, 
rests upon the assumption that these lands revalued in 
1834, were worth as much then as in 824, when they 
were first bought, and it rests also upon tha imputation 
that those legislators, amou'j whom were John Erwin, 
Francis S. Lyon, Reuben Chapman, James Jackson, 
John J. Ormond, Arthur F. Hopkins and others like 
them, sacrificed the State's University fund in order to 



7 

unjustly favor a few land purchasers, nearly all of whom 
lived in one neighborhood in Franklin county : by let- 
ting them have these lands at about one half their value. 
In this assumption and imputation they ignore the fact 
that the litigation in the Winston case shows that both 
the trustees and the purchasers wer- unwilling to take 
the land with* its improvements, for the unpaid purchase 
money. Also as a matter of history it is of interest to 
read a memorial to the Congress of the United States 
passed at the same session, and found on page 194 of 
the acts of 1833-45, showing how Congress had by suc- 
cessive relief laws in favor of purchasers reduced the 
price of some lands in Alabama from $20 to $5 per acre, 
and this upon the express ground of the general depr^^- 
ciation in values after the lands were bought. 

But aside from this, having found Judge Porter's esti- 
mate of a loss of $144^239.18 erroneous on its face, we 
proceeded to make sojue estimates for ourselves. We 
went through the accounts which show the original 
sales of all the land and made a list of the revalued and 
resold lands in order to ascertain the total amount for 
which the revalued and resold lands originally sold, and 
found by our calculation that the aggregate of these 
original sales, of revalued lands, was. . . .$ 168,458 56 
Being sold at one-fourth cash, one-eighth 
one year, one-eighth two years, and one- 
half eight years, we deducted interest on 
the deferred payments, which we calcu- 
lated to be . 30,765 69 

Thus making their cash value at the time 

of sale $ 137,692 ST 

Before the resale, there had been paid on 

them 63,133 55 



8 

So that the amount of original purchase 

money clue on them when resold was. . .$ 74,559 32 
By the resales there was realized . 59,361 98 



Leaving an apparent loss by this calcula- 
tion of . .| 15,197 34 

Instead of the $144,239.18 as claimed. 

And this loss we think was from general depreciation 
in value, rather than from favoritism in the Legislature, 
as has been charged. 

The next claim is for half of Judge Porter's fee of 
$20,000.00, paid by thetrustees for his services as agent 
and attorney. Judge Porter was appointed the sole 
agent for the university in 1834, displacing all other 
agents, some eight or ten in number. The "appeal" 
p. 21, says that ' 'he devoted two years to bringing up a 
set of books showing the receipts and disbursements on 
account of land sales, and continued in the service of 
the board two years longer, collecting claims on the er- 
rors discovered, many of which were litigated, and was 
paid by the board over $20,000.00 for his services.*' 
Judge Porter may have received an undue compensa- 
tion for his four years' services as sole agent, expert ac- 
countant, book-keeper and attorney, but it is not proven 
to us, nor that the State would be chargeable even if he 
were over-paid, but at this date, it is impossible to know 
all the circumstances and conditions inducing the board 
to pay that amount. We are cited to a statute concern- 
ing collections of University debts, approved January 7, 
1835, giving the agent 5 per cent on amount exam- 
ined and reported by him, and no more. We think the 
Legislature intended 5 per cent, on debts or collections. 
It was not 5 per cent on gross amounts reported. For 
he reported as shown by his statements hereto annexed 
some $495,000, and yet the *' appeal" says that he re- 



■ceived over $20,000 for his services, which included 
services as lawyer and agent for four years, etc., etc. 
Five per cent, on the $495,000 would, by itself amount tc 
$24,750. So far as we can see, this claim was never 
made until 1898, sixty years after it is said to have oc- 
curred . 

But even should we allow this $10,000 and also the bal- 
ance of apparent losses on resales as above stated, they 
ivould amount to. only $25,197.34, and against that we 
-see, from page 61, History of Education in Alabama, the 
following : 

"At the same time (the time of Porter's Report, 
November 1, 1836) , the University was indebted to 
the bank for money borrowed, and used in the erec- 
tion of buildings, and the purchase of libraries and 
apparatus in the sum of $85,318.91." 

This debt is elsewhere stated, "Notes of the University 
:held by the bank $64,500.00". And in 1848, when in- 
cluded in the settlement then made, it was said to amount 
to $100,000.00.. 

The University has never repaid this borrowed money 
and it is more than sufficient to set off the claims aggre- 
gating $25,197.34 as above stated, if they should be al- 
lowed. 

ITEM 3. $108,962. _ . 

Upon the third item, ^108,962, supposed profits, over 
and above 6 per cent., earned by the State Bank off the 
University Fund prior to 1837; we have examined the 
Act of December 22, 1837, relied on and referred to, and 
we find that it provides that * 'After the passage of the 
:.act the Bank shall pay the University" all "the net 
profits made on the University funds." This has no 
direct application here, because no claim is made for. 



10 

profits realized after the passage v^f the act ; but the argu- 
ment is that equity requires that the State should pay 
the profits realized before 1837 ; and the profits allowed 
on the 3 per cent, fund are cited as what should be al- 
lowed the University. Comptroller Riggs, in his report 
for 1851, states that the total receipts of 3 percent, fund 
from Jan'y. 17, 1825, to Nov. 13, 1843, was $ 345,403.33 
The Dividends declared by the Bank, were 104,858.30 



$ 450,261.63 
He says, as to the dividends, * ' Jf they were clear profit 
the Bank is now indebted to the 3 per cent, fund $450,- 
261.63. But if merely normal the sum is $345,403.33. 
Also observe that during the eighteen years that the 
$345,403.33 of 3 per cent, fund was earning the nomi- 
nal $104,858.30, the University's $300,000 actually 
earned and received 6 per cent, per annum, or $324,000^ 
for the whole time. 

We are reminded also that the State paid its current 
expenses out of the Bank profits. Examining as to this, 
it appears that this began November 1st, 1836, and ex- 
tended for some 6 or 7. years, the State requiring the 
Bank to set apart $100,000 per annum of its profits, to* 
defray the expenses of the Government. See Act Jan'y. 
9, 1836 and De-^ember 23, 1837, and February 3, 1840,. 
the two last requiring an additional $40,000 to be set 
apart for the same purpose. This, if it proves anything,, 
proves that profits were made after 1837, yet though the 
law •f December 23, 1837 expressly gave them the profits 
after 1837, the Trustees did not assert any claim under 
that law ; thereby seemingly confessing there were none 
made after 1837. Moreover, whether the Bank actually 
made profits or not, could not be known until the day 
for settling came ; and a day of settling did come. In 
1840 it was ascertained and reported that the amount of 



n 

State Bonds originally issued to the Banks and constitut- 
ing their capital, and then outstanding, was, $10,- 
859,856. In 1842 it was ascertained and reported that 
of the $16,401,873 of debts due the bank, $7,749,737 
were bad or doubtful. This points to an immense loss 
which ultimately fell on the State as the result of this 
Banking business. A farther evidence of this ultimate 
loss appears in the Comptroller's report of 1848, showing 
the State debt to be then $11,155,498.71 mainly for bonds 
issued, as we understand, to the bank. But even had 
profits been made, the University could not fairly claim 
them . They were made by incurring risks of the Bank 
capital, which risk the University did not share in ; be- 
cause by virtue of the law of 1823 the University funds 
were all put beyond risk or loss, being invested in '^ State 
stock or certificates of debt, bearing interest at 6 per 
cent., payable half yearly to said Trustees, or kept sub- 
ject to their order, according to the law of the State to 
the amount of such sum or sums as may, from time to 
time, be paid over by said Trustees to the Bank, the in- 
terest to be forever applied to the use of said Seminary,'* 
and this was done **for and in behalf of the State and 
with the pledge of the public faith and credit," and 
these funds have been thus safel} kept through all the 
vicissitudes of the last seventy- fiive years. 

ITEM 4. $300,000. 

As to the $300,000 for value of property burned by the 
U. 8. Army in 1865, we examined the act engrafting the 
military feature on the University and do not see that 
the State is in any wise responsible for the burning or 
its consequences. 



12 

COMPROMISES AND SETTLEMENTS. 

We have also examined the records and minutes of tlie 
Trustees and the Acts and journals of the legislature, as 
far as we can find them, as to two settlements and al- 
lowances made on account of these claims, in 1848, and 
again in 1860. We find that in 1848 the University was 
receiving interest on ^'300,000 from the State, and the 
State held $64,500 of University notes for borrowed 
money, which with interest, amounted to about $100,000. 
The University, for several years prior to 1848, as shown 
by various reports and documents before us, was insist- 
ing on the State not claiming this ^§64,500. Many ap- 
peals were made at that period, which we have exam- 
ined ; and it was in connection with these appeals, and 
to induce the State to release the $100,000 debt that the 
University made the claims for $144,239.18 and $108,- 
962, above mentioned. The claim for $10,000 first ap- 
peared in 1896. And while they stated the claims they 
did not ask their payment but used them to persuade 
the legislature to give up the -^100,000 which was eventu- 
ally done. 

In 1848 this matter was settled by the State giving up 
one half of the $100,000 claim against the University; 
an Act being passed February 21, 1848, providing that 
"$2 )0,000 be declared to be the amount of the University 
fund, that all notes held by the State against the Uni- 
versity be cancelled, and this shall be taken in full satis- 
faction of all claims which said Trustees have, or pretend 
to have against the State for interest, damages or losses 
of every kind or description whatever, and they shall 
file written relinquishment, &c., &c." We find in the 
record of the Board of Trustees, a copy of this relinquish- 
ment, which is very full and explicit, and with it we see 
no sign of objection or protest. 



13 

Governor Reuben Chapman in his message to the 
legislature in 1849, says that the Board accepted the 
terms of settlement, and executed the relinquishment, 
which was filed in the office of the Secretary of State. 

On behalf of the University it has been said that this 
settlement was made "under solemn recorded protest." 
We have made diligent search through all accessible 
records, and made inquiry of those likely to know, with- 
out finding any satisfactory proof of this protest being 
made . We find among the papers an old clipping from 
the Tuscaloosa Monitor, of what purports to be the re- 
port of the Hon. N. Alfred Agee, Chairman oi the Com- 
mittee on the University in the House of Representa- 
tives in 1853, which says among other things : "By an. 
Act of Legislature passed February 21, 1848, the sub- 
sisting debfcs between the State and the University were 
adjusted by an equitable compromise. Their mutual 
debts were liquidated and $250,000 recognized to be the 
amount of the University fund." 

Oar xeceut information is that this rneas arc vv'a;^ wiih 
Hifficalty passed by the efforts of the friends of the Uni- 
versity, in the face of, and because, it is said, of threats 
of other parties to wipe out the whole endowment. 

A report of a legislative committee at the session of 
184s urged the acceptance of the University's request to 
compromise all claims, the State releasing its $100,000. 

This committee argued elaborately three separate 
propositions: (1) "It would be equitable." (2) '^The 
compromise would be fair to the State." (3) ''The 
compromise would be beneficial to the University," and 
it refers to it as a compromise proposed by the Univer- 
sity to relieve it of its onerous burden to the State. And 
this compromise as offered and urged on behalf of the 
University was ultimately accomplished, though it was 
not till 1860 that it w^as entirely completed. 



14 

It will be observed that the State by this compromise 
of 1848, gave up $50,000 of its $100,000 worth of Uni- 
versity notes, and credited the other $50,000 on the $300.- 
000 endowment fund, thus reducing the endowment to 
$250,000 ; and the University relinquished "All claims 
it had or pretended to have'* for those losses now sub- 
mitted to us for adjudication. 

But in Xuvemt)er 1859, it again came before the Legis- 
lature. Governor Moore, in his annual message saying 
that the "Trustees appeal to the Legislature to restore 
to the permanent fund the sum of $50,000 which they 
alleged has been unjustly taken from it." This was 
acceded to by the Legislature, and instead of $250,000, 
$300,000 was again fixed as the permanent endowment 
fund ; and the State Treasurer was also ordered to pay 
to the University interest on $50,000 from February 21, 
1848 to February 21, 1860 ; and thus all the University 
had been asking was granted. By a subsequent law the 
interest was raised from 6 to 8 per cent. 

It may be true that the scope of the commission might 
authorize us to report any amount equitably due the 
University, notwithstanding these settlements. Bat be- 
ing made near to the date of transactions, by men bet- 
ter informed than we can be, and by Legislators and 
Trustees whose patrotism and wisdom should not be 
lightly questioned, the settlements themselves are very 
persuasive of the justice of what was then solemnly 
agreed upon. 

RELATION BETWEEN THE UNIVERSITY AND THE STATE. 

Elaborate arguments have been made to us and else- 
where, as to the trust relation between the State and 
the University, and it has been likened to that between a 
guardian and his ward. It is expressed thus in a series 



15 

of written "Propositions" presented to iis by the Presi- 
dent of the University: 1. ''The landed endowment 
of the University constituted a trust, in which the sov- 
ereign State of Alabama was Trustee, and the University 
the Ward." 

The true doctrine on the subject was clearly settled in 
18o3 I)y our Supreme Court in the Winston case, quoted 
above, (hir couid cites Chief Justice Marshall's opinion 
in the celebrated Dartmouth College case, in the Supreme 
Court of the United States, in which he says : "If the 
funds of the College be public propert}^, or if the State 
of New Hampshire as a government, be alone interested 
in its transactions, the subject is one in which the Legis- 
lature of the State may not according to its own judg- 
ment, unrestrained by any limitation of its power, im- 
posed by the Constitution of the United States." 

Our Judge Taylor then goes on to declare our corpo- 
ration ' 'The President and Trustees of the University of 
Alabama, an instrument of Government, created for its 
purposes ', The funds are "Altogether public property, 
* * * The lands have been granted to the State by 
the United States, for the purpose of endowing a Uni- 
versity, it is true, yet the property in these lands is not 
the less in the State, because the purpose to which they 
are to be appropriated is restricted in the grant. This 
institution is in every respect a public one, originated 
and prosecuted by the Legislative enactment, towards 
which no citizen contributed one cent, either in money, 
property, labor or service. * * ^ The Preident and 
Trustees of the University constitute a public corpora- 
tion and their charter may be altered, amended or re- 
pealed by the General Assembly of Alabama at their 
pleasure." While the title to the property is thus shown 
to be in the State, and its care devolved primarily upon 
the Legislature, yet we can see no wrong in the State's 



16 

intrusting the property and its management to this cor- 
poration, created as it was for this express purpose ; at 
the same time keeping the corporation under constant 
surveillance. This was not only a legal and proper 
course to pursue, but it would seem to be 
the only way possible and if the Legislature or the- 
corporation created by it, made mistakes in invest- 
ments or m legislation, no individual has a right to com- 
plain. No individual, or class, or section has any sep- 
arate interest. If we call the State the Trustee, it is 
also the cestui que trust y smd the University corporation 
4o^ "^ '^.':^c!':rcd by our Supreme Court, only an **instru- 
ment" or arm of the State. So there can be no antag- 
onism between the two. All arguments based on the 
idea of a possible conflict between them, ignore their 
true legal relations to each other. Hence this arm of 
th^ S^?.':o i? to be fostered as a man cares for each of his 
members, and all possible must be done and paid to en- 
able it to continually grow in fitness and ability for its 
hip-hlv honorable and constantly increasing work. 

There is another view of the indebtedness of the State^ 
_ of this genera! ion to our Universi- 
ty, which can properly be considered in this part of our 
report. We are heirs to a rich and varied patrimony, 
ijuuu. o'luula ii'j>' nj letMii ctiiu u^wcuue ulie will, concerning 
this institution, of those who bequeathed it to us. 

In a report by a Joint Committee of the Legislature, 
made in 1834, and signed by James Jackson, F. S. 
Lyons, J. J. Ormond, Eeuben Chapman, Arthur F. 
Hopkins and others, it is clearly stated as a part of the 
original plan for the support of the University, as shown 

■■> ■> - -. -- ^ p. . - _ ?•''»-». .. . _ T . <• J T - 1 ,T ^ 

donated by Congress should be kept undiminished as an 
interest bearing funds, the buildings to be provided for 
without impairing the corpus of the fund. Our investi- 



17 

gations show that this was clearly the expressed will of 
the founders of the State ; and it would seem that a 
moral obligation upon us to carry out their purposes 
*^ruQs with the inheritance," as legal obligations of the 
father "run with the land" and rest upon the son wha 
inherits from him. • In this view when we consider th& 
concessions and appropriations aggregating some $200v 
000 made in 1848, 1860, 1866, and 1884, and other sim- 
ilar grants of money by the S"ate for the University, w& 
do not count them as items in a debit and credit ac- 
count between the Treasury and the University Fund ;; 
but as a recognition by those who voted those moneys^ 
of their duty to conserve this property of ours, and en- 
large its power to do well its work ; and we may also 
count them as precedent and promise that each succeed- 
ing generation will be alike true to its duty in this re- 
gard. "We may also observe that while the original ex- 
pressed purpose was that the whole proceeds of the- 
land, which was some $382,000 should be on interest^ 
yet the real underlying principle and purpose was that 
the University should have a securely invested and ad- 
equate income. What was sufficient two generations^ 
ago, is hardly adequate now ; so that the duty upon us 
if we would execute the will of the fathers, is to limit 
the provision we make for the support of our University^ 
onl}^ by its growing necessities and the ability of the 
State. 

Recurring, however, to the strictly legal aspect of the 
subject we deem it well in conclusion to give, 

A GENERAL VIEW OF THIS ENDOWMENT FUND. 

By the year 1838, the amount of State 

Stock had reache'd the sum at which it 

now stands, viz : . ........ ...$ 800,000 00 

P-art of the proceeds of the land had been 



is 

invested in baildings and other improve- 
ments. On Page 46 of the Appeal, six 
of these buildings, burned in 1865, are 

valued at 300,000 00 

Besides these there were seven or eight oth- 
ers, including the President's mansion, 
costing probably 50,000 00 

We thus see that Jhere were, in 1865, en- 
dowment and permanent improvement 
to ihe apparent aggregate value of. . . . .$ 650,000 00 
And the proceeds of these lands were all that the Trus- 
tees had, from which to make these investments. 

On the other hand, tlie total sales of the two town- 
ships, which constituted the corpus of the property, was, 
according to Judge Porter, only, $382,715 57. 

We are not required to account for the difference be- 
tween these two sums, but may observe that the estima- 
ted valuation of the burned buildings is probably be- 
y ond their cost, and the excess should be taken from the 
$650,000.; and on the other hand, there should be added 
to the $382,715.57 the $64,500 borrowed from the Bank 
and invested in Library, buildings, &c. Also there 
must be added to the resources which were at the com- 
mand of the Trustees, the rents and interest accruing 
prior to 1831, when the IJniversity was opened, a large 
part of which was doubtless used to swell the endow- 
ment and permanent improvement of the property. 

It is enough for the purposes of the question submit- 
ted to this Commission to conclude, that as regards the 
safety of the fund and regularity of the income from it, 
the proceeds of the land w^ere most wisely invested, by 
ihe la\^ of 1823 in State Stocks, with a pledge of the 
faith and credit of the State ; a faith tli2ili has been keprt 
through long years of trial and disaster. While the ia^ 



19 

€ome has supported the institution, the amount perma- 
^nently invested, as above shown, is manifestly greater 
than the largest amount charged to have been realized 
from the lands ; all of which results are to be credited 
to the wisdom and faithfulness of the Legislators and 
Trustees of the two proceeding generations, upon whose 
doings we have been called to sit in judgment; and 
who ought not to require vindication before the face of 
their children. ' 

Our opinion and judgment is that the State is not 
justly or equitably indebted to the University in any 
amount, exceeding that now recognized as an endow- 
ment fund. 

All which is respectfully submitted, 

J. J. Mitchell. 
James W. La^psley. 

Montgomery, Ala., Dec. 9th, 1898. 



m 



To His Excellency, the Governor, the Board of Trus- 
tees, and the Alumni Association, of the University of 
Alabama : 

The undersigned Commissioners appointed under the 
act of the Legislature approved February 18th, 1897, 
©rganized shortly after the commission was completed^ • 
and had our first meeting March 3rd, 1898, and have- 
kad before us and have examined : 

1. Record books showing minutes and proceedings of 
Trustees of the University from 1823 to 1841. 

2. Accounts of the agents and their records of the 
sales and receipts of purchase moneys. 

3. Reports of B. F. Porter, Agent, and the accounts- 
made by him of the transactions of preceding agents, in- 
cluding his original report prepared for the Legislature^ 
€>f 1836-7. 

4. Various publications, addresses and appeals to 
the Legislature made by the Board of Trustees and by 
others in their behalf, including the reports and speeches 
by Col. F. Bugbee, Hon. Jos. W. Taylor, Rev. J. W, 
Pratt. Prof. W. S. Wyman in History of Education in 
Alabama, appeal to the Legislature of Alabama by the 
Alumni of the Universic^^, October lb96. 

5. The Federal and State legislation on the sv.bject 
from the act of Congress in 1819 on through the various 
acts of the Legislature up to the' act appointing this 
Commission, and the opinion and judgment of the Su- 
preme Court of Alabama in the case of the Trustees vs.. 
Winston, 5th Stewart and Porter's Reports, page 3. 

The act creating this Commission authorizes us to ex- 
amine witnesses and official and historiC;J records, and 
we will welcome any additional evidence that may be- 
brought forward. If any of the parties interested will 



21 

indicate a wish to be'heard orally, or to offer any addi* 
tional evidence, we will appoint a time and place when 
they can come before us. 

In view of the shortness of the time before the as- 
sembling of the Legislature, it is desirable that these 
.matters be attended to at an early date. 

Respectfully, 
[Signed.] J.J. Mitchell, 

Eugene A. Smith, 
James W. Lapsley. 
Tuscaloosa, Ala., June 30, 1898. 



-A STATEMENT OF THE CONDITION OF THE MONIED CON- 
CERNS OF THE UNIVERSITY OF ALABAMA FROM 
THEIR COMMENCEMENT TO THE FIRST 
OF NOVEMBER 1836. 

Proceeds of the sale of forty-five thousand 
three hundred and five acres, thirty-two 
hundredths of an acre of lands originally 
sold as the property of the University of 
Alabama $ 382,715 57 

Amount of interest which should have ac- 
crued thereon on account of deferred 
payment of the last half of purchase 
money 55,700 59 

Proceeds of the sale of lands re-purchased 

under various relief laws 51,959 01 

Amount of interest which shoald have ac- 
crued thereon on account of deferred 
payment 4,676 04—^495,05121 

Amount collected as rent on University 
, lands and on leases 25,319 30 

Amount of balance of original collections 
on sales not invested nor in the treasury, 
but carried to account of expenses .... 6,191 053^ 



Amount of this fund expended for con- 
tingencies .' $ 31,510 353^ 



22 



AMOUNT OF MONIES COLLECTED BY VARIOUS PERSONS ON ACCOUNT OF UNI^ 
VERSITY LANDS, viz: 

By Edmund Lane ^ 6,838 93 

Thomas Owen 6,377 89 

James ^ckson 38,837 75 

William Graham 467 16 

James Simpson 91 58 

Benjamin Davis 902 92 

David White 7,502 90 

Lewis B. Allen 3,890 09 

Phillips & Shacklef ord 1 ,236 50 

Oonstantine Perkins 194,543 22 

Sundry persons, accounts not 

stated 6,529 28 

Benjamin F. Porter 60,647 99 —S 327,866 2± 

Probabe amount of debts now due as 
principal and interest on said salei 
and from all that appears available 

in future 22,945 79 

Probable amount of loss to the Univer- 
sity fund from forfeitures, relief 
laws, resales, deducted interest, re- 
linquishments, leases, etc 144,239 18 — 167,184 97 

$ 495,051 21 

Amount vested in 6% stock. $ 281,966 38>^ 

Unexpended balance in the treasury. . 39,708 85 

Available debts estimated at 22,945 79 

Lands yet unsold 562 acres estimated at 200 00 344,820 97>^ 

Whole amount of the funds of the Uni- 
versity and other avails from lands. . $ 344,820 97>^ 

RECAPITULATION. 

The above exhibit of the monied affairs of the University of Ala- 
bama so far as the sales of its lands are concerned, is condensed for 
records and books prepared by the present agent after two years of 
incessant and arduous investigation. Little doubt need therefore be 
entertained of the correctness of the several items herein contained. 
The details of the settlement he presented are too expensive for any 
ordinary investigation ; and the object of the undersigned h^is been 
only to give results as much simplified as possible. Calculated to- 
the Ist of November, 1836. 

[Sicfned.] Ben^IAMin F. Porter. 

Agent and Attorney for the Uni^e.i:sity. 



23 

MINORITY REPORT. 

From the conclusions of the majority of the commis- 
sion, I feel constrained to dissent. 

1. On General Grounds. — The history of these trans- 
actions has been handed down from those who witnessed 
and participated in them, and have become an integral 
part of the history of the University. During the 38. 
years of my connection with the University as student 
and officer, I have received the story of these transac- 
tions through numerous channels and I find myself un- 
able to ignore or forget this history, current and unde- 
nied in the University, to the effect that a considerable 
part of the University fund was lost or wasted in the 
early years of its history, through the carelessness and 
neglect of those charged with its management. I am 
not able to admit without the clearest proof, and that, 
to my mind has not been, and cannot now be adduced, 
that the long list of distinguished men, such as Martin, " 
Manly, Garland, Crenshaw and others who were con- 
temporaries with the transactions which we are commis- 
sioned to examine, and who were by their positions re- 
quired to inform themselves as to these matters, have 
reached practically unanimous conclusion, without good 
and sufficient reasons, and I must express my belief that 
the sources of information accessible to them were more 
numerous, full and exact than any which we at this day 
can command. 

2. Specifically. — As to losses by resales of forfeited 
lands, leases, negligence of agents, etc. 

The principal conclusions arrived at by the majority 
of the commission as to the relations between the State 
and the. University seem to be correct, and in so far as 
they declare the decision of the Supreme Court caanot 
be denied, I most heartily endorse and a^ree with all 



24- 

that part of the report of the majority which implies a 
moral obligation resting upon those who have received 
this trust to carry out the clearly expressed intention 
and will of its founders, which was to preserve intact 
the entire amount of the proceeds of the land sales as an 
endowm<=nt fund, and to make adequate provision for 
the varying and increasing needs of the institution ; and 
I think the adjustments and concessions made from 
time to time by the State for this purpose, show the un- 
derlying intention on the part of the State, as repre- 
sented by the Legislature, to carry out in good faich the 
obligation imposed upon it in the acceptance of the trust, 
so far as it has been possible to ascertain what was right 
and equitable. 

To say that all the acts of the Legislature bearirg on 
these interests, have come up to the full measure of jus- 
tice and equity, and that no mistakes have been made, 
•would be to say that the members of the Legislature 
were more than mortal. 

It is my duty as a member of this commission to 
point out what appears to me to be the instances in 
which the University has not received the full measure 
of what was in equity due to it. It is specially to be 
noted that the University corporation, with all its trus- 
tees and agents, is, in the majority report, stated to be 
only the instrument of the State government, and there- 
fore what was done through these agencies was done by 
the State. While difference of opinion naturally exists 
as to the degree of liability on the part of the State for 
the management of its trust, some eminent lawyers hold- 
ing and expressing the opinion that the relations be- 
tween the State and the University fund are the same 
a.s those between a guardian and his ward, or between 
trustee and cestui que trust, with the important distinc- 
tion that the State cannot be sued, it would, in an 



25: 

-event, seem that it should be the pleasure of the State 
i;o make good losses entailed upon its trust through the 
specific acts of its highest authority, the Legislature. 

The exact amount of the loss to the University fund 
through relief laws, resales, negligence, etc., cannot now 
he ascertained. We may, however, approximate it in 
two ways ; admitting that Judge Porter had better facil- 
ities ia 1836 than we have in 1898, for ascertaining the 
true condition of the financial affairs of the University, 
we may take his estimate of the probable losses to the 
University fund by relief laws, etc., $144,239.18, and de- 
ducting $56,635.05, the amount apparently twice charged 
as shown in the majority report, the amount of loss to 
the University fund in 1836 still appears to be consider- 
able, viz : $87,604.13. 

Or, we may estimate the loss occasioned by a single 
-act of the Legislature, viz : the Relief Law of January 
7th, 1854, which ordered the lands forfeited to the Uni- 
versity for non-payment of purchase money, to be re- 
valued at less than half the original valuation, and re- 
sold. In the majority report it is shown that the value 
of the resold lands was $168,458.56, from which deduct- 
ing $30,765.69, interest on deferred payments, there 
remains $137,692.87 as representing their cash value at 
the time of the original sales in 1823-5. Now, as de- 
clared by the Supreme Court in the Winston case, these 
lands, with all their improvements, were the absolute 
property of the University, forfeited for non-payment of 
the purchase money. 

The manner in which the trustees intended to dispose 
of these forfeited lands is shown by their ordinance, 
passed August 17th, 1833, which provided that the lands 
declared forfeited by decision of the Supreme Court, 
should be disposed of by first making application to 
the persons whose lands were thus situated, and unless 



26 

all the arrears of principal and interest were pai4 \^Y 
November 1st, the agent was directed to enter upon an^ 
hold on account to the use of the University, all such 
forfeited lands, peaceably or otherwise, if necessary. 

When payments were not made as above, the agent 
was authorized to permit entries to be made by other 
persons upon payment of such arrears : no entry per- 
mitted for less amount than any one's entire purchase. 
But, by an act of the Legislature quoted, which on its 
face declares that it was for the relief of the 'purchasers, 
the trustees of the University were deprived of their 
rights in the premises, and the purchasers were allowed 
to regain their lands, by payment of a portion only of 
what had originally been agreed upon. And that, too, 
after they had had ten years' use of these lands. If we 
make a rough calculation of the results of these trans- 
actions, it will appear as follows : 

Cash value of the original sales of ihe resold 

lands, without improvements $137,692 87 

It is assumed that these lands were worth 
as much, with improvements, ten years 
later ; yet the Legislature ordered them 
resold, (ignoring improvements in mak- 
ing the revaluation) for. . . .$60,775 61 

Of which there was collected . 59,361 98 



The difference $ 78,330 8^ 

represents the probable loss to the University fund by 
the resales of the forfeited lands. 

In the majority report it is stated that this claim 
rests in part upon the assumption that these lands were 
worth as much in 1834 as in 1823, and the attempt is 
made to show that the forfeited lands had, between 
1823 and 1834, greatly deteriorated in value, and that 



-27 

the revaluation in 1833 at $8.00 an acre, was fair and 
eqmitable. As to this, it might with propriety be said 
that in these ten years the purchasers had all the bene- 
fit of the cultivation, which caused the deterioration, 
whatever it might have been, and the University should 
not have been made to suffer therefor. So that, grant- 
ing a deterioration, I think we may reasonably hold 
that these lands, ivith the improvements, (expressly ex- 
cluded in the revaluation under the relief law of 1834) , 
should have brought to the University the full amount 
of the original valuation. But I have taken the pains 
to find out something about the present and past values 
of 6,280 of the 8,400 acres, which were revalued and 
sold under the provisions of the act named. These tracts 
are all situated in T. 4, R. li W., in Colbert county 
(formerly Franklin); the same township in which Tus- 
cumbia is located. I have received from the highest 
oflicial of that county, an estimate of the present market 
value of those very tracts which were resold in 1834. 
These estimates run from ^2.00 to $50.00 an acre, and 
the average of the whole 6,280 acres is ^14.31 an acre. 
The same authority quotes a county commissioner, 78 
years of age, as asserting that the value of these lands 
is about what it was in 1834. Now it ten years' culti- 
vation, between 1823 and 1834, could diminish the value 
of these lands over one-half, one would reasonably expect 
over sixty years* use, since 1834, to have left some 
mark: upon them other than an enhancement of their 
value nearly fifty per cent. I think, moreover, that 
general experience has shown that lands really improve 
in value under cultivation for at least ten years. I 
have, therefore, personally, no doubt whatever that 
the forfeited lands in 1834 with the improvements, and 
for that matter without them, were worth quite as 



28 

much as they were in 1823, i. e., at least $17.00^ an 
acre. 

I do not, therefore, see how we can escape the con- 
clusion that a very considerable loss, by one calcula- 
tion, over $78,000, and by another over $S7,000, was 
sustained by the University fund in consequence of. the 
relief law cited. 

I do not think that this claim rests in any way, as 
stated in the majority report, "upon the imputation 
that those legislators, among whom were John Erwin, 
Francis S. Lyon, Reuben Chapman, James Jackson, 
John J. Ormond, Arthur F. Hopkins, and others like 
them, sacrificed the State's University fund, in order to 
unjustly favor a few land purchasers." I think we will 
all allow that acts may be passed in good faith and with 
the best of intentions on the part of the legislators, 
which may, notwithstanding, work injustice. If every 
such act carried with it the implications of the deliber- 
ate intention of the majority of the Legislature enacting 
it, perpetrating a fraud, I doubt if reputable men could 
be found willing to serve in the Legislature. 

3. As to the Fee paid to Judge Porter. — Referring to 
the report of the committee of the Legislature of 1833-4, 
appointed to enquire into the financial affairs of the 
University, we find ample evidence that a thorough in- 
vestigation of the condition of the fund arising from the 
sales of the University lands, was imperatively de- 
manded. 



29 

The committee report, "That they have, so far as the limited time 
allowed them would permit, examined the books, papers and docu- 
ments relating to the afifairs of the University, from the time of 
its establishment to the present date Your committee have discov- 
ered with deep regret, that the books and accounts relating to the 
affairs of the University, have been kept in such manner as to plac© 
the affair of that interesting and important institution in a most per* 
plexing and confused situation . No system or method has been ob- 
served in keeping the accounts of the University ; nor can your com- 
mittee discover, from any books or papers submitted to their inspec- 
tion, any means by which to test or ascertain with a reasonable de- 
gree of certainty the true situation of the accounts of the various 
persons who have incurred responsibilities to the institution. They 
find on file, various reports made by the agent of the trustees, con- 
taining accounts of the sales of the University lands made by him, 
showing to whom sold, for what amount, &c. ; but iTi some instances 
these reports havt not been recorded, nor have accounts been regu- 
larly opened with all- the purchasers of University lands, so as to 
show whether the purchase money has been paid or not. Bonds for 
debts due to the institution, as appears by some of the documents- 
examined by your committee, have been placed out for collection 
without any evidence being retained showing the liability of the per- 
son who received them. A report made by a committee of the board 
of trustees during last summer, and prepared with great labor, shows 
the fact, that 125,809.33 of University money stands upon the books 
of the institution, to the credit of certam persons who had collected 
and paid over the same, without showing of whom, or from what 
particular source, this sum was derived." 

"If the books and accounts of the institution are in such a condi- 
tion as to render it impossible to assertain from whom and on what 
particular account this amount was received, it would be difficult to 
assertain from them, whether all the pej'sons who have contracted 
business with and for the institution have accounted faithfully or not. 
Your committee beg leave to submit, herewith, a copy of the report' 
of a committee of the trustees, showing the situation of the* 
accounts and books relating to the business of the University. 

"The act establishing the University provides that the capital stocl: 
arising from thp sale of the University lands shall not be reduced in 
any manner whatever. A. sum not exceeding $50,000 in the discretion 
of the trustees; of the moneys which might be received from the first 
payment of the lands sold, was appropriated and set apart by law for 
thd erection of the necessary buildings of the University ; and the in- 
terest arising from the last payment to be made upon the lands sold 
was set apart and to be vested as the same might be received, in stock 
of the United States, to be applied exclusively to sinking the amount of 



30 

money appropriated to the erection of the buildings, until the amqunt 
invested should be equal to the amount expended; after which, the 
same was considered as capital stock, and was never thereafter to be 
diminished. 

Then follows a statement of receipts and disbursements of the Uni- 
versity funds, and estimates for the current year, after which the 
report goes on to say: "The interest of the institution and the cor- 
rect management of the liberal fund derived from the lands granted 
to this State for its endowment, require that something should be 
done to rescue from confusion and uncertainty, as far as practicable, 
the accounts and books of the University. To this end your com- 
mittee would recommend the passage of a joint resolution appoint- 
ing the comptroller, with authority to associate with him some 
skillful accountant and bookkeeper, to examine and investigate all 
the accounts and reports of sales of University lands ; to ascertain to 
whom each particular tract was sold ; for what price ; the amount re- 
ceived thereon including principal, interest, &c., and to examine into 
all the disbursements made by the board of trustees, on what account 
&c., and to open and bring up a regular set of books, showing the full 
and correct situation of accounts of all persons who have had deal- 
ings with the institution or any of its agents, and to cause said books 
to be delivered to the trustees at its next meeting." 

"Your committee would further recommend the passage of a joint 
resolution requiring the agent of the board of trustees to make a re- 
port of his proceedings and transactions to the president of the board 
regularly, sho'ving the amou it received by him. from whom, on what 
account, &g., and to deposit the amount which may be in his hands 
at the end of each ([uarter, in bank; the amount derived from the 
sale of lands to be invested in bank stock, and the amount derived 
from other sources and called Income Fund, to be placed subject to 
the control of the board of trustees." 

The report concludes with certain recommendations to the Board 
of Trustees, which have r.o bearing on the present investigation, and 
is signed by 

James Jackson, 
J. J. Ormond, 
M. D. Williams, 

On the part of the House* 
- F. g'.LYoi^, 
J. W. Lane, 

K. CHAPiflN, 

On the part of the Setiatf 



'^1 

Upon the recommendatioa of this committee, a joint 
resolution was passed "appointing the comptroller with 
authority to associate with himself a skillful accountant 
and bookkeeper to examine and investigate all 
the accounts and reports of sales of the University 
lands, to bring up a regular set of books and to' 
cause said books to be delivered to the Trustees at their 
next meeting, etc. The trustees also, in August 1834. 
passed a resolution directing the agent to report the whole 
amount of the sales of the University lands, showing the 
a-rftounts paid in, the amounts still due, and distinctly 
showing the amount of the capital or principal and the 
amount of income lunds. 

In the following year, 1835, the Legislature passed an 
act. approved January 7, to ''regulate the collection of 
the University debts," in which section 3, the agent of 
the University was required to do practically the same 
work, with the difference that an allowance of 5 percent, 
was made to him upon all amounts reported on. 

In view of the joint resolution of 1834, it would seem 
ihut further legislation was unnecessary, so far as con- 
cerned the preparation of the books showing the situa- 
tion and amount of debts now due and owing, what 
lands have been sold and what lands are unsold, and 
the amounts due on each, etc. 

Yet the committee of the Legislature, of which Judge 
Porter was a member, recommended the bill which was 
afterward enacted into a law. It is impossible to know 
M this time all the circumsta-nces bearing upott these 
fensactions, but we have evidence that. Judge "^orter 
wgis ag^nt 6f the Board of Trustees, and at the same time 
ineniTyer of th^ Legislature from Monroe 6oiinty, and the 
Seporter of the Supreme Gouti, It is fair to presume 
iit^t he received conip6nsati6ii^ for stU ihese ^fvices in' 
which the University was not concerned, so that payment 



32 

to him aggregating over $20,000 for two or even four 
years work upon the University accounts appears, under 
the circumstances, excessive. Indirectly, we have learned 
that the payment of this amount was resisted by the Trus- 
tees, but finally made in accordance with the terms of the 
act quoted. In any event. Judge Porter was employed to 
bring up a set of books showing the condition of the land 
accounts, and he was employed by reason of the confu- 
sion into which these accounts had fallen, and the con- 
sequent danger of loss of the fund. And it seems to 
me that it should be the pleasure of the State to make 
reparation for the losses to this fund, caused by the acts 
of omission and commission of the Legislature, audits 
agents in the management of this great trust. 

The claim of the Alumni on this account not only seems^ 
valid, but I should go further and say that whatever 
part of Judge Porter's fee was paid for bringing order 
out of the confusion into which the University accounts 
had fallen, was properly a charge upon the State. 

The joint resolution of the Legislature of 1834 shows ^ 
I think, that, that body entertained the same view, for 
the identical investigation and preparation of books was 
ordered by that resolution at the expense of the State. 

4. As regards the relations of the University to the 
State Bo/Ilk — The act of 1823 organizing the State Bank 
required that the University funds to the amount of 
|100,000 should be invested in bank stock ; and this was 
the limit until 1827, when all, and by inference, more 
than $100,000 of the monies arising from the sales of the 
lands were required to be similarly invested. In 1833 
the amount the University fund invested in bank stock 
was declared to be $300,000 and it remained at this Jat 
least until 1848, On these amounts 6 per cenl^. interest 
was allowed and paid, the fajth and credit of the State 



33 

being pledged for the permanence of the fund and the 
prompt payment of the interest. 

On the other hand, between May 6, 1829, and Novem- 
ber 14, 1835, money was borrowed by the trustees from 
the bank to the amount, exclusive of interest, of $64,500, 
on which $18,000 was paid. 

From a report made in 1846 by Hon. F. Bugbee, it 
appears that before and during the period when these 
debts were existing, in addition to the money on which 
the University had received certificates of bank stock, 
there were other large sums on deposit in the bank on 
which the bank did business and derived profit, but on 
which the University received no interest. The report 
continues : "At the time when the first note was made, 
there was on deposit to the credit of the agent 
of the University as agent, over eight thousand 
dollars, and four days thereafter, a half year's interest 
accrued on the University stock. During the years in 
which these notes were made, there w^ere at different 
times, large deposits in the bank applicable to the Uni- 
versity funds. To the credit of the agent as agent, on 
the 7th of June, 1830, the balance was $25,559.62 ; which 
sum was greater than all the notes then held by the 
bank. On the 2]st of April, 1831, there was in like 
manner, on deposit to the credit of the agent, $26,714.27 ; 
which was also greater than all the above mentioned 
notes held at the time by the bank. The balance to the 
credit of the agent, in the early part of 1833, was over 
$33,000 ; and from that time up to 1837, the balance on 
deposit in the bank to the credit of the University and 
its agent, as such, varied from about thirty tliousand to 
over forty-two thousand dollars. Now if the interest be 
allowed on these deposits, which seems to be fair and 
equitable, and interest charged on the notes, the differ- 



34 

eiice of interest could not be L\rge ; and if the profits h,ad 
l:)een carried so the University fund, the balance of inter- 
est would have been in favor of the University ; and the 
debt in 1837 would have been more than paid." 

It would seem to be bad maaageraeiifc on the part of 
the State to permit these funds to lie in bank to the 
credit of the University, without taking up the notes due 
the bank. No individual or corporation would have per- 
mitted such a thing. Surely the Legislature was blam- 
able for running the risk of losing deposits and profits, 
(as it is claimed by the majority report) , without can- 
celling the obligations against tlie University. 

The question hinges upon the profits of the bank, 
vv'hether they were real or only nominal. While in view 
of the final settlement of the bank's affair's, there may be 
diflferences of opinion on this point, there seemed to be 
only one opinion in 1837, and that w^/is that the bank made 
large profits and declared dividends of ten per cent, to 
twelve per cent, on all stocks except tliat of the. Univer- 
sity (Bugbee's report) . The entire expense of the State 
government was paid out of these profits for several years 
after 1836. In the Journal of the House of Represent- 
atives, 1833-4, wf find it recorded th.at a bill was intro- 
duced reciting the fact that the entire net profit of the 
bank on the 3 per cent, fund had been set apart for pub- 
lic improvements, that the profits on the Sixteenth Sec- 
tion fund had been devoted to educational purposes, and 
praying that a similar liberal policy be pursued with ref- 
erence to the University and that the entire net profits 
of the bank made on this fund be set aside for the use 
and benefit of the Univei'sity of Alabama. This bill 
failed, but it shows clearly enough that, as early as 1833, 
the friends of the University were convinced that the 
profits of the bank were more than the 6 per cent, al- 



35 

lowed to the University. In 1837, the Legislature did 
finally pass an act placing the University on the same 
footing with the other two funds named, thus acknowl- 
edging the justice of the claim of the friends of the Uni- 
versity ; but this act came too late to be of any benefit, for 
the bank went into liquidation soon afterwards, and no 
share of the profits of the bank was asked for or received, 
so far as we are aware. 

In the flush times prior to 1837, therefore, it seems 
reasonable to suppose, as was asserted by Col. Bugbee, 
that the bank did really declare large dividends and real- 
ize large profits, and it further does not seem to be an 
unreasonable supposition, even though the profits on the 
University fund may not have been the $108,962 calcu- 
lated by Col. Bugbee from the data before him in 184G, 
it was yet enough to offset the $64, 500-$ 18, 000 of the 
debt. In other words, ^46,500 does not seem to be an 
undue proportion for the University to have received as 
its share of the profits made by the bank on University 
funds, which by law^ were made a part of the capital 
stock of the bank. 

Indeed I think the evidence now available goes to 
show that the notes for $64,500 held by the bank against 
the University were more than offset by the cash pay- 
ment of $18,000, and the profits made by the bank on 
University funds over and above the 6 per cent, interest 
allowed . 

No account is taken of the interest on the debt for the 
reasons above given. 

And in this connection we should not lose sight of the 
following considerations : 

The funds of the University were invested in State 
Bank Stock in 1823 and later, notwithstanding the fact 
that the people of the State had refused to subscribe for 



36 

such stock, though books of subscription were kept open 
during the years 1821-1823, at Cahaba, Huntsville, 
Claiborne, Tuscaloosa, St. Stephens, Courtland, Mont- 
gomery, Mobile, Blakely and Demopolis, under the act 
of Dec. 21, 1820. This showed, certainly a lack of con- 
fidence in the bank scheme on the part of those who had 
money, and yet the Legislature ordered this trust fund 
to be so invested. 

It would hence appear that the State is barred from 
claiming any credit for preserving intact the $300,000 
endowment fund, or from withholding any part of the 
profits of the bank on this fund. 

Whether the final settlement of the bank's affairs 
showed that these profits were real ^or nominal — they 
were real enough, if allowed prior to 1837, to have ex- 
punged the debt of the University to the bank. 

The profits on the three per cent fund, and on the Six- 
teenth Section fund were not withheld, and the interests 
represented by these funds received very substantial ben- 
efits from these profits. These funds had interested 
friends in every part of the State, and there were imme- 
diate demands for these profits. The interests of the 
University, the ward of the State, an important arm of 
the State government, were not so closely guarded; its 
friends were not so generally distributed over the State. 
Can the State allow this great interest to suffer on these 
accounts? 

5. As to the Settlements of 181^.8-59. — It is true that the 
two settlements gave to the University all that was at 
the time claimed — but we must take into account the 
fact that the University was then only striving to rid itself 
of the incubus of a debt, and to preserve the declared en- 
dowment fund intact. In all the reports and memorials 
which were made while these matters were pending, it 



37 

should not be overlooked that the calculations and state- 
ments show uniformly a considerable balance which in 
equity would still be due, but which the University was 
prepared to relinquish to gain the main thing desired. 
That these settlements were accepted in good faith by the 
then authorities of the University we have recorded proof ; 
that they were even at that tinie not considered equitable 
by all friends of the University we have also convincing 
evidence ; that they have been accepted by all, in succeed- 
ing years, is negatived by the very existence of the present 
Commission. Respectfully submitted, 

Eugene A. Smith. 
Montgomery, Ala., Dec. 9, 1898. 



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